One of the hardest parts of being an independent creator is having to run all of the parts of the business yourself. Lawyer Brittany Ratelle – also known as The Fine Printcess – recently led a News Creator Corps webinar to share insights into her work with creators and online entrepreneurs to secure their businesses legally.
Ratelle breaks down what independent creators need to know to protect themselves and their businesses into four parts:
- Protect Your Foundation
- The Four Scariest Contract Clauses
- Negotiate Your Brand Deals like a Lawyer
- Creator Exposure Problems
“I have a really unique lens, and I feel an obligation, a moral obligation, to help protect especially independent creatives and creators. We don’t have a union. We don’t have a guild. And normally the leverage is a little bit pitted against you, especially when on the other side of a contract or a deal or an opportunity, someone might have counsel and a whole team of people, and yet you’re trying to look out for your interests,” Ratelle said.
Protect your foundation
“Too often, I work with creators, and they get to a certain point in their business, and they start to get opportunities, and they get excited about other things they could do, especially when they’ve kind of figured out one channel or one audience and built that,” Ratelle said. “And they look underneath them and realize they’re a squatter. They don’t own their name. They’re on a platform that has risk. All their eggs might even be in one platform basket.”
Protecting your options means protecting your name, your intellectual property, and rights that you may be mistakenly signing away in a contract.
“You need to clear the rights to your name,” Ratelle said. “By your name, I mean any of these things: Your brand name, your social media handle, your YouTube channel, your gamertag, the name of your course that’s making you money, or your membership, or your e-book, or your hero product name, or line, or connection, or your event, or your app or tagline, or slogan. All of these things can and should be protected by trademark.”
Ratelle notes it can be expensive to protect all of these at once since it requires roughly a $3,000 investment per trademark, but you can plan to do it in steps over time.
“If this is your brand that you want to actually put some boundaries on and grow that empire like we talked about, you gotta put some fences around it so that you can own it, and you don’t have people that can use your name and can steal traffic or hurt your reputation and otherwise confuse the marketplace and your audience,” Ratelle said.
She highly recommends working with a trademark attorney for this.
In addition to trademarking your name, Ratelle recommends creating and protecting your LLC, or limited liability corporation. If you don’t have an LLC yet and are a sole proprietorship, you’re not doing anything wrong, but you also have no asset protection. There is no boundary between your personal money and your business money. Once your LLC is formed, she also recommends setting up a separate business bank account, where all your business-related costs flow in and out of. She recommends saving roughly 25% to 30% of your business income for taxes, and you can pay yourself through payments from that account.
Here are the steps Ratelle laid out to set up your LLC:
- Set up contact info. Don’t use your personal address because this will be public. Use a virtual mailbox, a P.O. Box, or a commercial registered agent.
- Google “your state + LLC” to find the website where you can fill out the necessary forms. Make sure to look specifically for sites with .gov at the end.
- Use a business name or DBA (Doing Business As).
- Get a tax-identification number, or EIN, from the IRS.
- Pay your state fee, which will renew yearly. Most states are between $100 and $200, but California, for example, is about $800.
- Set up a business bank account.
- Keep your business money separate from your personal money.
- Always sign contracts under your LLC, not your personal name.
- Flow money from the business through the tax system.
The four scariest contract clauses
There are four contract clauses to be weary of, Ratelle said. Those are perpetuity, exclusivity, revenue split, and indemnification.
You might see these in brand deals, publishing agreements or book deals, co-branded products and joint ventures, revenue sharing, merchandise and licensing, and voice-over, reality show, and other “traditional” entertainment deals, she said.
Perpetuity
Search the contract for terms like “intellectual property rights,” “copyright,” “licensing NIL (Name, image and likeness),” “work for hire,” and “assignment.”
Make sure to narrow perpetuity clauses in time and assign specific licenses or use to specifically defined materials.
Keep or add language, such as archive/edit/deletion reservation rights, require safe storage practices, and prohibit any “simulated or cloned voice or likeness.”
Exclusivity
Search for words in the contract like “term,” “non-compete,” “morals/morality,” and “services.”
Narrow in exclusivity clauses in time or campaign terms or narrow them to named competitor brands or products.
Exclude implicit endorsement and shop links, and if they try to go more broadly, charge them more money for the opportunity cost you will lose by not being able to take other business.
Revenue Split
Search for terms in your contract like “compensation,” “fees,” “expenses,” “royalties,” “costs,” “sunset fee,” “breakaway,” “false start,” “liquidated damages,” “gross vs. net (look for a definition in the contract),” “administrative,” “overhead,” and “COGS.”
Clarify all the calculations and definitions in the contract. Evaluate fixed vs. variable vs. shared revenue. Define the split specifically, Ratelle said. For example: “If we sell $X, pay $Y.” Make sure to exclude automatic renewals and unrelated revenue streams.
Add an audit right, get approval over the use of NIL (name, image, and likeness), and approve each product sample. Discuss who owns customer data like an email list.
Indemnification
Indemnification lays out who will cover the legal costs if a third party sues.
“You can imagine this can be really scary if you’re going against a big company because if something goes wrong, who’s going to be left holding the bag, right?” Ratelle said.
This can happen in the contexts of IP infringement, advertising fraud, product liability, or libel and slander.
In the contract, search for terms like “indemnity/indemnification,” “liability,” “risk allocation,” “force majeure,” and “subrogation.”
Narrow the scope of liability by using “caused by” of “resulting from” only your actions. Limit the time where you would cover damages and include that this is only after all options are exhausted.
The other company should cover their behavior, Ratelle said. Void indemnification if the other party commits grossly negligent acts or omissions or willfully fails to abide by the contract in bad faith.
In general, when it comes to contracts, Ratelle said, slow down. Don’t feel rushed to sign if it means you can’t do your due diligence. A good deal will still be around in 24 to 72 hours. Always ask for an editable version of the contract and turn on track changes or suggestion mode. And, as Ratelle mentioned when it came to LLCs, never sign personally.
Finally, Ratelle encourages you to know your worth. Think about what leverage you have in the deal, check current market rates and be civil, but firm, with errors and pushbacks.
Negotiate a brand deal like an attorney
Ratelle gave 10 tips on how to negotiate your deals like an attorney would.
- Make sure your headings match. Use your LLC and not your name.
- The scope of work should be tight and specific. Some examples include: 60-second reel, how long the link is live, which account/platform, etc.
- Payment: details how and when, invoicing procedure, and add a late fee.
- IP and usage: Name your price for creative and distribution. Strike work-for hire language. You should own the IP. If licensing, be specific with the time, usage, and value. Define exclusivity to a narrow list of brands or products.
- Termination or kill fee: Request an upfront percentage of the payment if the company seems suspicious, and a flat fee if the campaign is cancelled.
- Approval and revisions: Try to limit revisions to one round of consolidated edits where you are only required to reshoot if you depart from the brief, brand guide, or talking points. Don’t have more than one meeting about the single product-content deal.
- Liability: Cap it to the value of your contract.
- Indemnification: Who is paying for litigation costs if a third party sues? The brand or agency should cover product liability and IP infringement. Mutual indemnity for FTC compliance.
- Morals: Make morality clauses mutual so that if either of you do something that is embarrassing to the other party’s reputation, either party can walk.
- Read all exhibits. Even if it seems like the contract is standard, redline it anyway.
Creator exposure problems
Finally, Ratelle flagged some exposure issues to look out for: website compliance, 1099 misclassification, commercial music use, and platform risk. She also advised to be careful about Federal Trade Commission disclosures.
If you want to dig deeper, Ratelle has courses and contract templates available online. You can also, of course, hire her.